24. May 2024

Ethereum Supply is Running Out – This Data is Important

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It’s not bad if you look at the Ethereum course at the moment. The Ethereum price rose to $ 4,175 today, marking a new all-time high. However, behind this increase is not wild speculation, but a rather simple fact: the supply of Ethereum is becoming scarce. We take a look at the current state of Ether and what the on-chain data still says.

On-chain data shows: Ethereum supply is running out

If you look at the current on-chain data, one thing becomes clear: Ethereum is becoming increasingly scarce. Two important factors influence the scarcity. First, the number of ethers included in so-called smart contracts is increasing; second, the crypto exchanges have fewer and fewer ethers. The ether stock on the exchanges is currently lower than ever before. Incidentally, the number of ethers bound in smart contracts is almost an all-time high. The shortage is well illustrated in the following picture:

Ethereum Angebot wird knapp
Source: glassnode.com

The crypto exchanges currently hold almost 12% of the total amount of Ethereum in circulation. As recently as September last year, the volume in circulation on exchanges was over 16%.

Smart contracts currently include 22.8% of the amount of Ethereum in circulation. This means that almost 35% or a third of the total amount in circulation is not available for trading.

So far, the trend is still intact, so that a further supply shortage is advancing. Above all, institutional investors are increasingly relying on Ethereum. In addition, Ethereum 2.0 is fueling the course. The possible return on staking Ethereum from 32 pieces should be very attractive so that many are already stocking up on it.

Ethereum price prediction

At the beginning of April, the CEO of CryptoQuant, Ki Young Ju, drew attention to the fact that large amounts of Ethereum had flown from Coinbase to private wallets. It was about an impressive 400 thousand ETH. Given the size and popularity of Coinbase with institutional investors, the CEO suspects that they are institutional buyers.

In addition, it was announced that at the crypto asset manager Grayscale in the last quarter of 2020 a full 93% of all capital inflows into cryptocurrency came from institutional investors. The weekly (!) Investment in the Grayscale Ethereum Trust at that time was over 26 million US dollars.

Ethereum trend

How likely is it that the price trend will continue? Nobody can say that. It is clear that a clear trend can be identified. Accordingly, more and more institutional investors are interested in the second-largest cryptocurrency by market capitalization. The blockchain analysis by Santiment shows that large investors (from 10,000 ETH) currently hold around 70% of the total supply of digital currency. This is the highest value since 2017.

CoinShare also confirms this trend. According to the CoinShares report, most of the investment has flowed into Ethereum in the past few months compared to other cryptocurrencies. Coinshare cites March as an example. This month, a total of over $ 130 million from institutional investors flowed into Ethereum. A total of US $ 469 million was invested in all cryptocurrencies over the same period. In terms of percentage, 28% was invested in Ethereum alone, although the cryptocurrency makes up 12% of the total market capitalization.

With institutional investors, most of the money will flow into the market. Ethereum is currently benefiting from this. Ethereum 2.0 could also fuel the course. The potential is currently particularly high with Ethereum.

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